PM to bet her future on Shorten

Prime Minister
Julia Gillard
is set to unveil a high-risk reshuffle of her ministry today designed to elevate
Bill Shorten
into the industrial ­relations portfolio, but alarming colleagues who believe the internal fallout could be significant and reinforce negative views of her leadership.

An announcement is expected around midday.

Cabinet ministers were called to the Lodge over the weekend to learn their fate, with high-profile casualties to include Workplace Relations ­Minister
Chris Evans
, Industry ­Minister
Kim Carr
and Small Business Minister
Nick Sherry
.

Treasurer
Wayne Swan
and Foreign Minister
Kevin Rudd
both stay in their jobs.

Senator Evans will remain in cabinet and as the government’s leader in the Senate but will move portfolios to make way for Mr Shorten, who has pushed the case hard with the Prime Minister that he is a better policy advocate and can help Labor win back its traditional base.

Ms Gillard signalled at last week’s ALP national conference that she intended going on the attack over industrial relations next year.

However, it is the demotion of Senator Carr, one of Ms Gillard’s longest standing supporters, that has sent shock waves through the government.

From the Victorian Left, Senator Carr is believed to have been deeply shocked and upset when told of the decision by the Prime Minister. He has developed a good relationship with the industry policy constituency at a time of considerable pressure on manufacturing, and has emerged as much more of an economic rationalist in his handling of the portfolio as he has gained confidence in the job.

The poll, published today in The Sydney Morning Herald and The Age, confirms the blow to the government from last weekend’s ALP national conference and the way it reignited tensions between Ms Gillard and Mr Rudd.

Speculation was rife about other possible moves and about the extent of the reshuffle.

But across the government, there were concerns about how any ­reshuffle could be managed which would not be seen as simply promoting the factional players behind the Gillard coup against former prime minister Kevin Rudd, or unsettling the delicate factional balance within the government.

For example, Senator Carr is from the Victorian Left while Mr Shorten is from the Victorian Right. Senator Carr’s spot might go to South Australian Left convenor
Mark Butler
. But a Right faction “body" must still be found to make way for Mr Shorten in what is already a heavily loaded Victorian Right cabinet.

The reshuffle will be sold as a ­limited, but significant, reshuffle designed to bring new young blood into the ministry and especially ­cabinet.

It will involve a “small expansion" in cabinet numbers but not in the overall ministry.

The changes will be promoted as highlighting the particular areas of prime ministerial focus in the next 12 months: the transformation of the economy – particularly involving industrial relations, ­climate change, industry policy and skills – and social policy that ensures no one is left behind. There were conflicting signals about the future of Attorney-General
Robert McClelland
yesterday, with some sources insisting that he would be stepping down and others saying he would survive.

Education Minister
Peter Garrett
is factionally unaligned and also occupies a seat which the NSW Right regards as their property, so was regarded as potentially vulnerable in any reshuffle. However, he is staying in his job and will be responsible for selling reforms to school funding coming from the looming Gonski review.

The Prime Minister’s options have been limited by the constraints of the caucus, however. Senator Evans ­cannot be removed from the ministry because caucus has elected him the party leader in the upper house with
Stephen Conroy
as his deputy, ensuring both of them frontbench positions.

Sources late yesterday dismissed the possibility of Agriculture Minister
Joe Ludwig
being removed, given his family ties to the Queensland Right.

There was no suggestion of any move for
Penny Wong
in Finance,
Craig Emerson
in Trade and
Simon Crean
in Regional Affairs, the last of these a key portfolio in the government’s relations with independent MPs.

While the Coalition challenged the Prime Minister to move Mr Rudd because of the clear ill-will between the two, sources said any attempt to do so would trigger “world war three" within the government.

Ms Gillard’s changes were considered so sensitive that some wondered whether Mr Rudd would seek to exploit them to increase the objections to her leadership.

Any casualties from the reshuffle might add to the group of Rudd ­supporters within the caucus, increasing the possibility of a ­leadership challenge next year if Ms Gillard’s poll ratings do not improve.

“She is playing with a powder keg," said one caucus member.

Ms Gillard sought to move Mr McClelland out of the cabinet last week in the middle stages of her reshuffle plan, but resistance to the change grew over the weekend.

“Robert is definitely digging in," said one individual within the government, while others said the Prime Minister had encountered obstacles to her original plans.

Some expressed concern that the reshuffle should have been announced on Sunday and that the decision to delay the outcome until Monday reflected Ms Gillard’s ­inability to dictate all the changes she wanted.

“I think the government has a ­policy problem, they don’t just have a personnel problem," Mr Abbott told Sky News yesterday.

“She can change the faces but unless she changes the policy, this is going to be a very bad government."

Mr Abbott said there was no need for any change on the Coalition side.

“I don’t believe we have a policy problem and I don’t think we have a personnel problem," he said.

“I have no plans for a reshuffle. Now, I don’t know, there might be some retirements. Who knows? But I am very happy with my existing team.

“I think the senior members of my team are performing extremely well. I think that that’s the team I am going to take to the election."